THE 2000 CAMPAIGN: THE VICE PRESIDENT

THE 2000 CAMPAIGN: THE VICE PRESIDENT; Gore Family's Ties to Oil Company Magnate Reap Big Rewards, and a Few Problems

By DOUGLAS FRANTZ

Published: March 19, 2000

CARTHAGE, Tenn.—
On the third page of Vice President Al Gore's most recent financial disclosure report, after routine listings for his salary and the value of his house in Washington and his small farm here, is an unlikely entry -- $20,000 for leasing land for zinc mining.

Behind the yearly lease payment, which has earned Mr. Gore about $450,000 since 1974, is the story of a sweetheart land deal from long ago, and the ties between the vice president and his family and Armand Hammer and his oil company, Occidental Petroleum.

While the origins of that relationship lie in these rolling hills of middle Tennessee and date back half a century, it has continued to bring both benefits and scrutiny for Mr. Gore as he has moved through Congress to the White House and finally toward his party's presidential nomination.

For instance, Occidental gave $50,000 to the Democratic Party for the 1996 campaign after a telephone solicitation by Mr. Gore from his White House office and another $100,000 after its chief executive, Ray Irani, spent two nights in the Lincoln Bedroom in 1996.

More recently, Occidental stock in the estate of Mr. Gore's father has made the vice president a target for environmental groups. They have demonstrated at about 30 Gore rallies, opposing the oil company's plans to drill on land in Colombia that Indians contend is theirs.

The broad outlines of the Gore-Hammer-Occidental connection have been reported at various points in the vice president's career, with bits and pieces of it published in books and articles over the years. Mr. Gore's father, Albert Gore Sr., even described the ties in a memorandum for the Clinton campaign when aides were checking his son's background before picking him as the running mate in 1992.

Now, as the pasts and legacies of both Mr. Gore and Gov. George W. Bush of Texas come under scrutiny in a new presidential campaign, the relationship of the Gore family with Mr. Hammer is once again drawing attention.

Essentially, Mr. Hammer sold the farmland to the elder Mr. Gore, then Mr. Gore turned around and sold it to his son, who was then a newspaper reporter in Nashville.

On Tuesday, Mr. Gore said in Nashville that there had been nothing improper about his family's relationship with Occidental and that the company's mineral lease on the farmland had been the result of a free market negotiation.

Officials with Mr. Gore's campaign and his White House office do not dispute the basic elements of the land deal. They also said that there had been nothing wrong with the transaction or with Mr. Gore's subsequent dealings with Occidental and Mr. Hammer, who died in 1990. The aides said the roots of the deal and the relationship were in the friendship between Mr. Gore's father, who died in 1998, and Mr. Hammer.

The elder Mr. Gore was a member of the House and Mr. Hammer was a wealthy businessman when they met in the 1940's at a livestock auction near the Gore family farm here, about 50 miles east of Nashville. Eventually the two men entered into a partnership raising and selling cattle, but that was only the start of a connection that lasted until Mr. Hammer's death.

Over the years, Mr. Hammer would become a legendary tycoon, courting politicians and leaders worldwide and operating many businesses. His close ties with the Soviet Union, where he had run a family company for nine years as a young man, and his freewheeling ethics brought him brushes with the law. In 1976, he was convicted of illegally contributing $54,000 to President Richard M. Nixon's 1972 campaign, though he was later pardoned. Along the way, Mr. Hammer helped make the elder Mr. Gore a wealthy man, and the politician became one of the oilman's most valued allies in Washington.

When J. Edgar Hoover, the director of the F.B.I., wanted to prosecute Mr. Hammer on suspicion of being an agent of the Soviet Union in the early 1960's, Mr. Gore Sr. defended him on the Senate floor. Mr. Hammer was not charged.

Letters in the elder Mr. Gore's papers, which are in an archive at Middle Tennessee State University, show that he provided many other favors to Mr. Hammer. For instance, he intervened with the Defense Department when Mr. Hammer's son, Julian, was having trouble getting a security clearance because of legal problems, and he persuaded the F.B.I. to let an agent testify on behalf of Mr. Hammer's company in a civil trial, according to the letters.

In 1965, Mr. Gore Sr. helped obtain visas to Libya for Mr. Hammer, his wife and two business associates when Occidental was trying to open oil fields in that country, according to a letter. The Libyan oil concession transformed Occidental into a major player in the oil market.

Mr. Hammer repaid the favors in many ways, large and small. He sent expensive Christmas gifts to Mr. Gore Sr. and his wife, Pauline, according to the letters. After Mr. Gore was defeated in his 1970 Senate re-election bid, Mr. Hammer appointed him chairman of an Occidental subsidiary and put him on the parent company's board of directors. One of Mr. Hammer's biographers, Edward Jay Epstein, wrote that Mr. Gore had never been rich until he went to work for Mr. Hammer.

Another fruit of the friendship was the zinc-mining lease. Mr. Gore Sr. had leased some of his farmland to Occidental for mining after zinc was discovered in the area in the 1960's. In 1972, Occidental bought a nearby farm, plus its mineral rights, for $160,000 at Mr. Hammer's insistence. Mr. Gore Sr. said he had suggested that Occidental buy the land.

How the vice president came to own the second farm was recounted in a 1992 article in The Washington Post and described in a statement that the elder Mr. Gore prepared for an arbitration case involving another mineral lease.

In the statement, Mr. Gore Sr. said Mr. Hammer told him after buying the nearby farm that the company wanted only the mineral rights and had no need for the land. Mr. Hammer asked Mr. Gore Sr. to buy the property from Occidental. The elder Mr. Gore said he agreed to buy the land for the same price of $160,000, but insisted that Occidental pay him $20,000 a year for the mineral rights, well above the price for most leases in the area. Mr. Hammer agreed and Occidental sold the land to Mr. Gore Sr. in 1973.

The terms were highly favorable for the elder Mr. Gore because, with the annual lease payment from Occidental, he would be able to recoup what he paid for the land in just eight years.

Land records here show that a year later, 1974, the younger Mr. Gore, then a newspaper reporter, paid his father $140,000 for the land and the mineral lease. The price was apparently reduced because his father had received one year's lease payment.

Mr. Gore has owned the land, and collected the lease payments, ever since, although there was no mining there until 1985, after Occidental sold the mineral rights to Union Zinc. The rights have changed hands twice since then and the current owner is Pasminco, an Australian company.

Mr. Gore's farm is a hilly parcel of 88 acres with a single-story brick house overlooking the Caney Fork River, about two miles east of Carthage, his hometown. Guardhouses on roads to the front and back of the house are the only indications that the modest home is owned by Mr. Gore, who rarely visits.

The pastures are laced with tunnels more than 1,000 feet deep for mining zinc, which is used primarily to prevent corrosion in steel. The mine itself, surrounded by large piles of tailings, sits about half a mile down a gravel road from Mr. Gore's house on a separate piece of land owned outright by Pasminco.

The long-running mineral lease was not the only link between the younger Mr. Gore and Mr. Hammer. While in Congress, Mr. Gore was host to Mr. Hammer at President Ronald Reagan's 1985 inauguration and at President George Bush's inauguration in 1989.

Former Senator Paul Simon of Illinois wrote in a 1989 book that Mr. Hammer promised him ''any cabinet spot I wanted'' to withdraw from the 1988 Democratic presidential primary race and support the younger Mr. Gore's candidacy. There was no indication that Mr. Gore knew of Mr. Hammer's offer.

Mr. Gore's connections to Occidental resurfaced this year after the company bought the federal government's share of a huge oil field near Bakersfield, Calif., known as Elk Hills. The 47,000-acre tract was acquired by the government in 1912 to ensure that the Navy had plenty of oil reserves, but it was deemed no longer necessary.

The government had tried to sell Elk Hills since the Reagan administration, but succeeded only two years ago as part of Mr. Gore's initiative to streamline the bureaucracy and ''reinvent government.''

The Energy Department sold the property to Occidental for $3.65 billion in cash through a competitive bidding process that drew 22 offers. Department officials said Occidental's price was twice the next-highest bid and double what the government had estimated. The sale was announced in October 1997 and completed in February 1998.

Questions were raised earlier this year about the extent of Mr. Gore's role in the sale in a book, ''The Buying of the President 2000,'' by Charles Lewis and the Center for Public Integrity, a Washington nonprofit organization.

Patricia Fry Godley, who oversaw the sale as an assistant secretary of the Energy Department, said Elk Hills had been put on the block because the Navy no longer needed its oil reserves. She said the selection had been made under the general orders of the ''reinventing government'' program, but that neither Mr. Gore nor anyone from his office had been involved in the choice of Elk Hills or its sale.

Records show other federal agencies had concerns about the sale. The Environmental Protection Agency complained to the Energy Department that the E.P.A. had insufficient information to assess the impact of the sale. The United States Fish and Wildlife Service questioned the impact of developing the oil field on several endangered species within the 47,000 acres.

Energy Department officials went ahead with the sale because they said they were under pressure to meet a sale deadline imposed by Congress and that all environmental concerns had been met before the deal was closed.

The Elk Hills purchase sent Occidental's share price up about 10 percent at the time, which increased the value of stock held by Mr. Gore Sr. Since his death, the stock has remained in his estate, whose primary beneficiary is his wife. The vice president's most recent financial disclosure report valued the stock at $250,000 to $500,000.

Mr. Gore is executor of the estate, but his aides say that he exercises no control over the stock in the estate and has never owned Occidental stock himself. But it is the estate holding that is making him a target of environmental groups protesting Occidental's activities in Colombia.

Stephen Kretzmann of Amazon Watch, one of the groups, said Mr. Gore met with him and several other environmentalists last month. Mr. Kretzmann said Mr. Gore explained that he could not interfere in a Colombian internal issue or Occidental's practices.

Photo: Albert Gore Sr., right, and Armand Hammer helped each other. They were in Egypt for this 1980 meeting with President Anwar el-Sadat. (Associated Press)